Win lottery, put cash in checking account?

Dear Dr. Don,
I recently won $9.7 million in my state's lottery. I was wondering if I should deposit my winnings into my bank checking account, my bank savings account or if I should use a credit union. How much money will each insure?
-- Gordon Golden

More On Checking Accounts:

Dear Gordon,
Good for you! Congratulations. You're right to be concerned about putting all your money in one bank account. Federal insurance for banks and for credit unions have similar limits for insured deposits. In general, the insurance limits are $250,000 per depositor at an institution insured by the Federal Deposit Insurance Corp. or the National Credit Union Administration.

However, the deposit insurance provision in the Dodd-Frank Act does allow for unlimited deposit insurance for money held in a "noninterest-bearing transaction account," at least through Dec. 31, 2012. While the act is very specific in defining this type of account, a loose definition is that it's a checking account that doesn't pay interest.

There is also a certificate of deposit available from a network of participating financial institutions called CDARS, or the Certificate of Deposit Account Registry Service. This private service allows a depositor to have a multimillion-dollar deposit with one bank while keeping the money federally insured. The bank that takes in the deposit reinvests the money in multiple federally insured bank accounts with other banks. Your money is completely FDIC-insured, but you are only dealing with one bank.

Wealthy people can be very conservative in how they invest their wealth. They are more concerned with protecting principal than they are with earning a return on their money. You can find a way to stash close to $10 million in a financial institution and keep it perfectly safe.

I see this as a stop-gap measure while you seek a wealth manager who can put together an investment portfolio that can balance your desire to protect principal with a strategy to protect the money's purchasing power over time. Inflation can whittle down your portfolio's value, and low-yielding CDs or no-yielding checking accounts aren't going to help you with that investment problem.

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